Small and Medium-sized Enterprises

Lord Sharkey Excerpts

Monday 29th October 2012 Lords Chamber

Asked By

[Lord Sharkey]

To ask Her Majesty’s Government what additional funding to small and medium-sized enterprises, particularly in deprived communities, has resulted from the Funding for Lending scheme.

[Lord Newby]

My Lords, the Funding for Lending scheme is not specifically targeted at particular regions or sectors of the economy; it is designed to incentivise banks to increase lending in aggregate, which will of course have a positive effect on the economy as a whole. The early indications have been encouraging but it is too soon to judge the impact of the scheme. The Bank of England will publish quarterly net lending figures for each participating bank from 3 December.

[Lord Sharkey]

I thank the Minister for that Answer. However, the fact is that the Bank of England’s last quarterly report shows that the stock of lending to SMEs continues to decline. It also shows that the number of loan applications themselves is down. I note that only 50% of SMEs had ever heard of Project Merlin. Could the same lack of awareness of Funding for Lending be contributing to the problem? Do the Government know how many SMEs are aware of this scheme? What are the Government doing to make sure that they are aware of the scheme?

[Lord Newby]

My Lords, the figures so far published do not take account of the impact of Funding for Lending, which only opened in August, and not least because it takes some time for loan approvals under the scheme to be finalised. I absolutely agree that promoting the scheme will be crucial. We are encouraged by the steps that the banks and building societies have already taken to do so, including double-page advertisements in national newspapers and promoting mortgage products very actively, not least through their websites. The Bank of England is administering the scheme but the Treasury is directly involved in monitoring it via a joint oversight board with the Bank.